Hugh Richards and Sioned Davies successfully defend a claim for judicial review of planning permission for a large urban extension to Worcester

R(Worcestershire Acute Hospitals NHS Trust) v Malvern Hills DC & others [2023] EWHC 1995 (Admin).

In a rolled-up hearing, Mr Justice Holgate has refused permission to bring a claim for judicial review in respect of an outline planning permission for a mixed-use sustainable urban extension to Worcester including 2,200 houses. The Claimant was the local Acute Hospitals NHS Trust which had been unsuccessful in persuading the three planning authorities that the developer should be required to pay a ￡1.8m s106 contribution. The judgment can be found here .

The outline planning application was submitted in 2013 at the same time that a local plan was submitted for examination containing the site as a draft allocation. The local plan was adopted in 2016. The application was first considered in 2018 when the committee resolved to grant permission subject to s106 contributions to the value of about ￡30m (largely roads and schools) and 20% affordable housing. The policy requirement was for 40% affordable housing, but 20% was acceptable on viability grounds.

In 2019 the Claimant submitted a request for ￡3.4m to cover a so-called revenue ‘funding gap’ for the provision of services to residents of the new houses in the first year of their occupation. This request was put before the committee which resolved, in line with the recommendation of its officers, that it was “unconvinced” of the basis of the claimed funding gap, and in any event, regarded the claim as less of a priority than the infrastructure already proposed to be funded and that affordable housing should not be reduced any further.

In 2021, the Trust repeated its request, giving further details of the claimed funding gap and revised methodology which reduced the request to ￡1.8m. It submitted comments on the report to committee. ?The committee again refused to disturb the earlier priority for s106 funding and remained of the view that the Trust had failed to show the extent of any funding gap so that the request had failed to meet the test of necessity in Reg 122 of the CIL Regulations.

The Claim proceeded on 5 grounds:

The first two considered by the Judge (grounds 3 and 4) concerned the conclusion by the Council that the request had not been shown to comply with reg 122 and that the Council had given inadequate reasons for rejecting it. The Judge held that both were unarguable. The Claimant had failed to deal adequately with the issues raised in the 2019 and 2021 reports and grapple with the concerns of the officers. The reasons were adequate.

On this basis, the Councils could not lawfully have required the developer to pay a financial contribution so strictly the other grounds fell away. But the Judge considered them anyway.

Ground 6 concerned the allegation that other advice in the report was misleading. The Judge held this was “overly forensic and does not accord the usual benevolence which the courts give to the reading of an officer’s report”.

Grounds 1 and 2 concerned viability reports prepared by experts for the applicant and the Council prior to the committee meeting in 2018. Ground 1 complained that the Councils did not re-open the viability assessment process once the Trust had made its requests for funding in 2019 and 2021. The Judge was satisfied that it was rational not to do so, particularly as the Trust had never challenged the Council’s conclusion that its request was of a lower priority than other infrastructure and affordable housing. It was also not irrational for members to rely on the officers’ summary of the viability reports rather than have access to the reports themselves.?A late application for disclosure of the viability advice considered by the Council was also rejected. There is a useful discussion as to the legal principles that apply in such disclosure applications.

Ground 2 alleged a breach of s100D of the Local Government Act 1972. The officers’ reports did not list the viability reports as “background papers” even though they were referred to in the body of the reports. However, the Judge accepted that they contained exempt information and that in the March 2018 report, officers had balanced the public interest in maintaining the exemption outweighed the public interest in disclosing it. Because this balance took place before the NPPF and PPG advice in July 2018 on submitting viability reports based on standard inputs on the assumption that they would be made public, the Judge declined to follow Dove J. in the Holborn Studios case and instead adopted the same approach as Patterson J. in the earlier case of Perry. ?However, in post-July 2018 cases, Dove J. is likely to be followed.

But Holgate J. went on to consider what the position would be if he had found a breach of s100D. The section gives no indication of the consequences for a decision reached where there was a breach. Having reviewed the authorities, the Judge held it would be necessary for the Trust to show some material prejudice. His conclusions at [146] may assist others in a similar position:?

“The Trust did not engage with the planning application before the main decision-making in March 2018. For a public body wishing to obtain a s.106 contribution that is most unusual and contrasts with the approach taken in this case by NHS Property Services and other public bodies. When the Trust became involved in 2019, it asked for contributions in respect of four large sites. Between 2019 and 2020 three sites were granted permission with only 20% affordable housing and no contributions for the Trust. The Trust made no criticism or challenge in respect of those decisions. It showed no interest at all in any viability issue on the SWDP45/1 site between January 2019 and October 2021. It then asked to see the latest viability report, indicating that, even then, it had not engaged properly with the officers’ three reports. It was clear from those documents that the only appraisals had been prepared in 2018 and had not been updated. [The Council] did not reply to the request but the Trust did not raise the matter again during the next 12 months before the permission was issued. There is no evidence explaining these long periods of disinterest and delay. The last gap between October 2021 and October 2022 is particularly striking. The Trust had referred to viability issues for the first time and had an opportunity to take the matter further if it thought that worthwhile. It did nothing. An authority could reasonably have taken the view that the Trust was not pursuing the point, just as it had decided to raise no issue over the absence of s.106 contributions in relation to the three other urban extensions which had been granted permission between 2019 and 2020. Viewed overall I am not persuaded that the Trust has suffered material prejudice.”

This case follows another “NHS Acute Hospitals funding gap” case earlier this year in which Holgate J. was also the Judge – it too is worth reading by anyone involved in this type of case: R (University Hospitals of Leicester NHS Trust) v Harborough District Council [2023] EWHC 263 (Admin).